In 1972, U.S. Congress passed Federal anti-kickback laws to protect patients from medical referrals based upon the healthcare provider receiving a kickback or financial incentive, rather than on medical necessity. Following the federal government’s lead, each state — including Michigan — enacted their own anti-kickback statutes. All licensed healthcare professionals must maintain compliance with these statutes, or they will face charges of healthcare fraud.
Michigan has at least five specific statutes that expressly forbid kickbacks. They seek to prohibit illegal patient referrals between healthcare providers (such as a doctor) and entities providing healthcare services for financial reasons (i.e. kickback).
Anti-Kickback laws apply to all Michigan providers of healthcare services including, but not limited to, physicians, dentists, pharmacists and pharmacies, nursing homes and hospitals.
In general, kickbacks include the practice whereby a person or business pays someone to find new clients or referrals and/or pays that person a percentage of the increased transactions resulting from those referrals.
Michigan’s self-referral laws, similar to federal Stark Laws, address situations in which the healthcare provider has a business interest in the facility to which he/she makes referrals.
It is a felony to: (1) solicit, offer, or receive a kickback or bribe in connection with the furnishing of goods or services for which payment is or may be made under the Medicaid program; (2) make or receive the payment; or (3) receive a rebate of a fee or charge for referring an individual to another person for the furnishing of the goods and services. Violations are punishable by up to four years in prison, a fine of up to $30,000, or both.
It is a felony to solicit, offer, pay, or receive a kickback or bribe in connection with the furnishing of goods or services for which payment is or may be made by a health care corporation or health care insurer. It is also unlawful to receive a rebate of a fee or charge for referring an individual to another person furnishing health care benefits. Violations are punishable by up to four years in prison, a fine of up to $50,000, or both.
Dividing fees for referral of patients or accepting kickbacks on medical or surgical services, appliances, or medications purchased by or on behalf of patients constitutes unethical business practices which may result in disciplinary proceedings. This provision applies to physicians and other health professionals.
Any physician or surgeon who divides fees with or promises to pay part of his or her fee to or pays a commission to any other physician or surgeon or person who consults with or sends patients for treatment or operation, is guilty of a misdemeanor punishable by up to six months in prison or a fine of not more than $750. The first conviction may result in loss of license. A second conviction will result in loss of license.
A person licensed to practice medicine shall not receive a fee or other remuneration from a clinical laboratory or intermediary for submitting specimens from a patient to a clinical laboratory.
For the daily practices of Michigan’s healthcare professionals, Anti-Kickback laws are regularly in effect. Because the business of health care generates frequent referrals from, to, and between providers of goods and services, there are times when these relationships provide for unlawful financial incentives.
Penalties for non-compliance are severe, so every health care practitioner/provider must know how their in- and outbound referral patterns could make them susceptible to liability under anti-kickback laws.
Kickbacks come in several different forms. Some are obvious, such as health care practitioners who accept cash in exchange for referrals. But others are more subtle: a hospital might make an informal agreement with a physician or medical specialist to refer patients to that hospital, and giving that healthcare provider a break on office rent in exchange.
It is surprisingly easy to unintentionally run afoul of Michigan’s anti-kickback laws, and the FBI and state authorities actively enforce the anti-kickback laws. In 2012, eight individuals — including four Michigan licensed physicians and one Michigan licensed physician’s assistant — were prosecuted for violating the anti-kickback statutes. These individuals owned and operated medical clinics, outpatient rehabilitation facilities, and home healthcare companies that paid employees and outside healthcare providers for patient referrals.
Even unintentional anti-kickback violations are prosecuted because the statutes do not require willful or knowing conduct. In a 1998 case, the court held that the prosecution does not need to show that the defendant had corrupt intentions in receiving the referral fee. Rather, it is only required to show that the defendant intended to receive a referral fee.
Because the penalties under Michigan’s anti-kickback laws are severe, we strongly urge healthcare providers and professionals to contact our lawyers at Chapman Law Group. We will work with you to ensure that your referral relationships are legitimate and would not lead to exposure under the law.
For example, healthcare practitioners must have a working understanding of the anti-kickback laws, including the types of activities that receive exemptions or “safe harbors.” Safe harbor refers to activities viewed as acceptable practices and depends on the circumstances of the case. For example, the splitting of income by a dental practice organized as a partnership does not constitute fee splitting.
Also, there is the “Employee Bona Fide Safe Harbor,” which excepts from its reach “any amount paid by an employer to an employee (who has a bona fide employment relationship with such employer) for employment in the provision of covered items or services.”
Or, for example, you may have a particularly entrepreneurial healthcare business in Michigan, and you are regularly establishing new and cutting-edge payment arrangements. If so, you should speak with a Chapman Law Group anti-kickback and healthcare compliance lawyer to obtain guidance on how to avoid arrangements that subject you to applicable laws.
For more than 35 years, Chapman Law Group’s regulatory compliance lawyers — along with our Medicare, Medicaid, and healthcare fraud and false claim defense attorneys — have been working with health care providers throughout Michigan to understand and comply with the anti-kickback laws.
We are here to be your trusted counsel in this area of compliance. Call us today and let us put our experience to work for you.
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